Week Ahead Preview: Highlights include NFP, ISM, RBA , RBNZ, BoJ Tankan, BoC BOS

• MON: Japanese Tankan Survey (Q1),
  Caixin Manufacturing PMI Final (Mar), EZ/UK/US Final Manufacturing PMI (Mar),
  US ISM Manufacturing PMI (Mar).
• TUE: RBA Announcement, South Korean
  CPI (Mar), US Durable Goods R (Feb).
• WED: RBNZ Announcement; Hong Kong
  Market Holiday, EZ/UK/US Final Services and Composite PMI (Mar), US ADP
  Employment (Mar), US ISM Services PMI (Mar).
• THU: Chinese Caixin Services PMI
  (Mar), Canadian Ivey PMI (Mar), Australian Trade Balance (Feb).
• FRI: Good Friday Global Market
  Holiday, US Jobs Report (Mar).

NOTE:
Previews are listed in day-order

JMMC (Mon):

The OPEC+
Joint Ministerial Monitoring Committee (JMMC) is set to discuss current market
conditions and the outlook on Monday. Analysts anticipate this meeting to be
relatively uneventful. While the JMMC is not a decision-making body, it
typically offers recommendations to OPEC+ regarding policy. This meeting takes
place amidst oil market volatility, as factors such as geopolitics, supply
risks, Russian price caps, sanctions, central bank tightening, and a
mini-banking crisis contribute to instability. In mid-March, reports indicated
that OPEC+ delegates remained encouraged by Asian demand. They largely
attributed the sell-off at the time to speculative money exiting the oil
derivatives market, rather than weakness in the physical market, according to
Bloomberg. Officials also anticipate that the derivatives market will
experience turbulence for an extended period. Subsequent reports suggest that
OPEC+ is likely to maintain its 2mln BPD production cuts until the end of 2023,
despite the price drop, as cited by three OPEC+ delegates in a Reuters article.
It is also worth noting that in mid-March, the Saudi Energy Minister and Russian
Deputy PM discussed the global oil market and OPEC+ efforts to enhance
stability and balance, as reported by Saudi media. Both nations reaffirmed
their commitment to the OPEC+ production cut decision. Analysts at ING believe
that “the group will recommend that OPEC+ adhere to the current supply cuts.
The group would have found reassurance in the market’s apparent stabilization
following the turmoil experienced in financial markets throughout March.”

BoJ Tankan
Survey (Mon):

The BoJ’s
key quarterly Tankan survey is expected to show declining business confidence
among large manufacturers. Estimates for the Q1 survey are mixed across
different industries. Large industry capital expenditure (CAPEX) is expected to
increase by 4.9% (prev. +19.2%), while small industry CAPEX is anticipated to
decrease by 9.0% (prev. +3.8%). The outlook index for big manufacturing is
projected to slightly drop to 4 (prev. 6), and the large manufacturers’ index
is predicted to decrease to 3 (prev. 7). The large non-manufacturers diffusion
index is expected to stand at 16 (prev. 11), while the large non-manufacturers
index is projected to be at 20 (prev. 19). For small manufacturers, the
diffusion index and the manufacturing index are anticipated to be -6 (prev. -5)
and -6 (prev. -2), respectively. Lastly, the small non-manufacturers diffusion
index is expected at 1 (prev. -1), and the small non-manufacturing index is
predicted to tick slightly higher to 7 (prev. 6). The Reuters Tankan, which
closely tracks the central bank’s quarterly survey, revealed that large
Japanese manufacturers remained pessimistic for the third month in a row in
March due to global economic slowdown concerns. However, the service-sector
firms’ mood improved, suggesting a domestic demand-driven recovery. These mixed
results emphasize the fragility of Japan’s economy as exports slow and private
consumption lacks momentum, according to some desks. Over the next three
months, the Reuters Tankan index is expected to rebound, but the service-sector
index is predicted to drop. Reuters’ Tankan canvassed 493 large companies with
a capital base of JPY 1bln employing 100 or more people.

US ISM Manufacturing
(Mon), ISM Services PMI (Wed):

The
Manufacturing ISM is seen easing to 47.1 in March vs 47.7 in February. As a basis
for comparison, the S&P Global PMI series reported an improvement in
manufacturing conditions, with the index rising from 47.3 to 49.3. New orders
have now fallen for six straight months in manufacturing however. “Unless
demand improves, there seems little scope for production growth to be sustained
at current levels,” S&P said. It also said that the manufacturing upside
was mainly a reflection of improved supply chains allowing firms to fulfil
backlogs of orders. The Services ISM is expected to moderate to 54.6 in March
vs 55.1 in February; S&P Global’s gauge for the month saw upside in the
services sector, which rose to 53.8 from 50.6. Within the release, there will
be attention on the price components after S&P said the inflationary upturn
was now being led by stronger services sector price increases, linked largely
to faster wage growth. Overall, S&P said that March witnessed an
encouraging resurgence of economic growth, with the business surveys indicating
an acceleration of output to the fastest pace since May of last year, and was
implying annualised GDP growth approaching 2%. That said, the upturn is uneven,
and largely driven by the services sector.

BoC Business
Outlook Survey (Mon):

There
will likely be less attention on the BOS this quarter, given the BoC has
already indicated that it expects to hold the policy rate at its current level,
conditional on economic developments evolving in line with the MPR forecasts.
That said, there will be attention on any commentary around prices, given the
Bank has left itself scope to resume policy tightening if it was needed to
return inflation to the 2% target.

EU Trip
To China (Tue):

European
Commission President von der Leyen (VdL) and French President Macron are poised
to travel to China on April 4th. The meeting comes soon after Chinese President
Xi’s three-day visit to Moscow, in which he met with Russian President Putin
and the two countries further expanded ties in several sectors, including
military strategic communication and coordination. Furthermore, SCMP sources
suggested that China’s Commerce Minister Wang Wentao is set to visit Brussels
in April, when he will likely look to steady “turbulent” China-EU relations,
according to SCMP. European Commission President VdL outlined the EU’s new
approach to China in her speech on March 30th. The new strategy aims to
safeguard the bloc’s interests, values, and citizens while addressing concerns
over China’s growing proximity to Russia. VdL outlined three main pillars:
bolstering economic security, acting more assertively, and selectively
cooperating with China, and emphasised the need for a new EU economic security
strategy and urged the bolder and faster use of existing tools, including the
Foreign Subsidies Regulation and the new anti-coercion instrument. She also
proposed developing new defensive tools to screen exports of dual-use
technology to systemic rivals’ like China, and reassessing the stalled EU-China
Comprehensive Agreement on Investment. The European Commission President also
stressed that the bloc’s approach is not about decoupling from China, but
rather reducing risks and maintaining cooperation in specific areas. Meanwhile,
the FT reported that the “new defensive tools” will be used to monitor
technology, including quantum computing, robotics, artificial intelligence, and
biotech. Analysts at RANE say the announcement demonstrates Brussels’ intention
to take a firmer stance on China while preserving economic and diplomatic
relations, as export controls are currently enforced at the member-state level.
On that note, it’s worth noting that Japan announced chip-making equipment
restrictive measures as part of a three-way agreement with the US and the
Netherlands. Japanese officials said the scope of restrictions went further
than the US measures imposed in 2022. Chip-equipment exporters would need
licenses for all regions. The measures will affect a broader range of companies
than previously expected, according to the FT. As always, a joint presser could
be perceived by markets as bilaterally constructive.

Chinese Caixin
PMIs (Thu):

The BoJ’s
key quarterly Tankan survey is expected to show declining business confidence
among large manufacturers. Estimates for the Q1 survey are mixed across
different industries. Large industry capital expenditure (CAPEX) is expected to
increase by 4.9% (prev. +19.2%), while small industry CAPEX is anticipated to
decrease by 9.0% (prev. +3.8%). The outlook index for big manufacturing is
projected to slightly drop to 4 (prev. 6), and the large manufacturers’ index
is predicted to decrease to 3 (prev. 7). The large non-manufacturers diffusion
index is expected to stand at 16 (prev. 11), while the large non-manufacturers
index is projected to be at 20 (prev. 19). For small manufacturers, the
diffusion index and the manufacturing index are anticipated to be -6 (prev. -5)
and -6 (prev. -2), respectively. Lastly, the small non-manufacturers diffusion
index is expected at 1 (prev. -1), and the small non-manufacturing index is
predicted to tick slightly higher to 7 (prev. 6). The Reuters Tankan, which
closely tracks the central bank’s quarterly survey, revealed that large
Japanese manufacturers remained pessimistic for the third month in a row in
March due to global economic slowdown concerns. However, the service-sector
firms’ mood improved, suggesting a domestic demand-driven recovery. These mixed
results emphasize the fragility of Japan’s economy as exports slow and private
consumption lacks momentum, according to some desks. Over the next three
months, the Reuters Tankan index is expected to rebound, but the service-sector
index is predicted to drop. Reuters’ Tankan canvassed 493 large companies with
a capital base of JPY 1bln employing 100 or more people.

RBA Announcement
(Tue):

The RBA
will conduct its policy April meeting next week and there are mixed views on
whether the central bank will continue hiking rates or pause, with a Reuters
poll showing 14 out of 27 economists forecast the RBA to hike the Cash Rate by
25bps to 3.85% and 13 expecting a pause, while money markets are more decisive
and are pricing an 87% probability for a pause. As a reminder, the RBA raised
rates by 25bps at the last meeting in March which was widely expected and the
central bank’s 10th consecutive rate increase, while it noted that the Board
remains resolute in its determination to return inflation to target and expects
further tightening of monetary policy will be needed, which was a slight tweak from
its previous guidance that the Board expects further increases in interest
rates will be needed. Furthermore, the RBA stated that monthly CPI suggests
inflation seems to have peaked and in assessing when and how much further
interest rates need to increase, the Board will be paying close attention to
developments in the global economy, trends in household spending and the
outlook for inflation and the labour market. The rhetoric from the central bank
was less hawkish than previous, but still pointed to further tightening and
Governor Lowe stated that they are closer to the point where it will be
appropriate to pause with the timing to be determined by the data and
assessment of the outlook, while he kept options open for the upcoming meeting
as he noted that they could pause if that’s what the data suggests, but if it
suggests keep going, then they will do that and have a completely open mind at
Board meetings. This places greater emphasis on the data, although the latest
releases have been mixed as Employment rebounded in February following two
months of contraction and the Unemployment Rate fell to 3.5% vs. Exp. 3.6%
(Prev. 3.7%), while monthly CPI in February was softer than expected at 6.8% vs
Exp. 7.1% (Prev. 7.4%) and recent PMI figures have slipped into contractionary
territory. In addition, the recent turmoil in the banking industry and
contagion fears add to the case for a pause and have prompted an adjustment of
expectations with Westpac now forecasting the RBA to keep rates unchanged at
the upcoming meeting and also lowering its peak rate forecast by 25bps to
3.85%.

RBNZ Announcement
(Wed):

The RBNZ
is expected to continue hiking rates at its meeting next week in an effort to
curb inflation, albeit at a less aggressive pace than previously with money
markets pricing a 97% chance for the OCR to be lifted by 25bps to 5.00% and
only a 3% probability for a 50bps increase. As a reminder, the RBNZ raised
rates by 50bps at its prior meeting, as widely expected, while the central bank
remained hawkish in which it signalled further rate hikes to return inflation
to target and noted that although there were early signs of price pressures
easing, core consumer inflation remained too high and the Committee agreed it
must continue to raise the OCR to fulfil its remit. Furthermore, the RBNZ
stated that the options it considered were either a 50bp or 75bp increase at
that meeting and it also maintained the view for rates to peak at 5.50%, but
upped its CPI forecast for March 2024 to 4.2% from 3.8%. The rhetoric from the
central bank since that meeting has remained hawkish as Assistant Governor Silk
stated that they are not contemplating a pause in tightening and all rate hike
options are on the table for the April meeting with the RBNZ to do all it takes
to control inflation, while Chief Economist Conway said inflation is high and
widespread because strong demand outstripped supply with the central bank
incredibly determined to get inflation and inflation expectations back to
target. Nonetheless, markets are pricing a less aggressive hike at the upcoming
meeting given the recent deterioration in data including GDP for Q4 which
showed a wider-than-expected contraction Q/Q, at -0.6% vs. Exp. -0.2% (Prev.
2.0%, Rev. 1.7%) and Y/Y growth at 2.2% vs. Exp. 3.3% (Prev. 6.4%), while
Retail Sales Volumes Q/Q also shrank, by 0.6% (Prev. 0.4%, Rev. 0.6%). The weak
data releases have prompted an adjustment in expectations and the recent global
banking turmoil has also added to the case for a downshift in gears with ASB
anticipating the RBNZ to hike by just 25bps in April and Westpac now
forecasting the OCR to peak at 5.00%.

RBI Announcement
(Thu):

The RBI
is expected to hike rates again when it concludes its 3-day policy meeting next
week, with 49 out of 62 economists surveyed by Reuters forecasting the Bank to
raise the Repurchase Rate by 25bps to 6.75%, while the majority of economists
then expect the central bank to pause after this meeting through to the end of
the year. As a reminder, the RBI hiked rates by 25bps at the last meeting via a
4-2 vote in which MPC member Goyal joined prior dissenter Varma in voting
against the rate increase and both continued to oppose the MPC’s decision to
keep the policy stance remaining focused on the withdrawal of accommodation,
which was also made through a 4-2 vote. The rhetoric from RBI Governor Das
remained hawkish as he noted that further calibrated monetary policy action is
warranted and the situation remains fluid and uncertain, while he added that
the stickiness of core inflation is a matter of concern and they need to see a
decisive fall in inflation, but commented more recently that the Indian economy
remains resilient and the worst of the inflation is behind them. Nonetheless,
inflation returned to above the RBI’s 2%-6% tolerance range for January and
February with the most recent CPI reading at 6.44% vs. Exp. 6.35% (Prev.
6.52%), which supports the case for a continuation of the RBI’s rate increases.
However, given the previous composition of votes, it would only need one
additional vote for a pause as long as that vote was from RBI Governor Das who
has the casting vote in evenly split decisions, while State Bank of India
Research are among those in the minority calling for a pause citing concerns of
a material slowdown in the affordable housing loan market and financial
stability concerns.

Australian
Trade Balance (Thu):

The Trade
Balance for February is expected to narrow to a surplus of USD 11bln following
last month’s surplus of USD 11.688mln. Analysts at Westpac forecast a wider
surplus of USD 12.6bln driven by an “expected pull-back in imports.” The desk
argues that in January, the import of transport goods increased by 29% due to
shipments arriving before Lunar New Year, but a partial reversal is expected in
February. Export earnings are projected to rise by 0.3%, driven by services
exports, which continue to grow after the national border reopened in the first
half of 2022. Goods exports are expected to remain stable in terms of both
volume and prices, Westpac says.

US Jobs
Report (Fri):

The
consensus looks for 240k nonfarm payrolls to be added in March, with the
unemployment rate seen unchanged at 3.6%. A headline vs consensus would be
lower than the prior, as well as recent trend rates (3-month average 351k,
6-month 336k, 12-month 362k), and would follow two months of upside surprises.
Average earnings are seen growing 0.3% M/M, a touch quicker than the +0.2% in
February, but may drag the annual measure down to 4.3% Y/Y from 4.6%. Average
workweek hours are expected to be unchanged at 34.5hrs. It is worth noting that
the data covers the period prior to the recent regional bank crisis; even so,
analysts suggest that the banking issues are likely to have a limited impact on
US labour demand more broadly. S&P Global PMI data contains employment
sub-indices, and these improved in the month for the services sector, but pared
back slightly in the manufacturing sector. Weekly jobless claims data that
coincide with the establishment survey window declined, remaining sub-200k,
highlighting ongoing tightness in the labour market.

For more
research like this check out Newsquawk’s live
squawk box for 7 days free.